Quick Summary of the Key Points
This news article highlights a very representative change in the industry: intermediaries who, in previous years, could earn millions or even hundreds of millions by simply reselling wind power project licenses (commonly known as “rights”) have almost all disappeared. Essentially, the era of easy profits in the wind power industry, where obtaining a license was enough to generate substantial gains, has come to an end. The industry has officially shifted from a speculative phase focused on resource speculation and networking to a more refined stage where profits are made through cost reduction and competitive strength.
---
Detailed Analysis
1. How Profitable Was the “Easy Money” in the Wind Power Industry?
Many may not realize how exorbitant the profits of wind power intermediaries used to be, which were even more substantial than those from cryptocurrency or luxury goods speculation.
The so-called “rights” were essentially government-issued permits to undertake wind power projects. In the early days, the state promised high electricity price subsidies for 20 years, ensuring stable, high returns for that period. This was like winning the permanent rights to a奶茶 franchise that would generate dividends for 20 years without any worries about finding a successor. At that time, the number of wind power development quotas allocated by the state was very limited, making these rights a scarce resource. Intermediaries who obtained them through local connections or special channels would not invest in building the power plants themselves but would instead resell them at a profit. At the peak of the market, a 1-watt right could sell for 0.30–0.40 yuan, and a typical 100,000-kilowatt project could generate profits of 30–40 million yuan just from reselling the rights. For larger projects with better wind resources, profits of hundreds of millions were not uncommon. Intermediaries did not need to invest or manage construction; they could make money simply by exploiting information asymmetries and their network of connections, which was much more lucrative than starting a factory or engaging in traditional business.
2. The First Major Blow: Regulatory Restrictions
The first major setback for intermediaries came from the tightening of regulatory policies.
After discovering the problem of rights reselling, governments issued strict directives. For example, in Inner Mongolia and Shanxi, companies that obtained wind power quotas were required not to transfer the equity of the projects within five years, and the same entity had to both apply for the project and operate the power plant. In Qinghai, the development rights could not be sold before the project was connected to the grid. Intermediaries tried to circumvent these regulations by setting up shell companies, but this loophole was also closed. As a result, many intermediaries either saw their projects fail to start due to government intervention or could not find buyers, leaving them with rights that were of no value.
3. The Even More Harsh Second Blow: plummeting Electricity Prices
The sharp drop in electricity prices further reduced the value of the rights.
In the past, high electricity prices meant that wind power projects could generate annual returns of 8–10%, allowing developers to recoup their costs within 10 years. Even if they spent millions on rights, the high profits made it worthwhile. However, current electricity prices are extremely low, with the lowest rate in Gansu being only 0.19 yuan per kilowatt-hour—lower than the cost of a bottle of mineral water. This has significantly reduced the profitability of wind power projects. For every 1% decrease in electricity prices, the annual return on investment for developers drops by 0.5–0.8 percentage points. With returns now below 5%, few developers are willing to spend millions on rights.
4. A Change in the Attitude of Developers
The investment logic in the wind power industry has reversed. Previously, obtaining a project meant guaranteed profits, so developers competed fiercely for them. Now, developers are more cautious and only consider projects that meet their profit thresholds. State-owned and central enterprises have set a minimum required annual return on investment of 6.5%; otherwise, they will not invest. For instance, a batch of wind power projects in Yunnan were abandoned due to insufficient returns. Offshore wind power projects in Jiangsu and Shandong, with returns of only 4.5–5.8%, did not even attract bids from central enterprises. Private companies are even more risk-averse, fearing losses on rights they purchased at high prices. State-owned enterprises, with lifelong accountability for their investments, are even more cautious about spending.
5. The Withdrawal of Intermediaries as a Sign of Industry Maturity
The disappearance of intermediaries is not a sign of the industry’s decline but rather a indication of its maturation. During the industry’s rapid growth, much resources were wasted on speculation and networking, rather than on reducing costs and improving operational efficiency. Now that the speculative benefits have vanished, only the most competitive players remain—those who can reduce construction costs by 10%, secure the best locations, or have advanced operational technologies. Intermediaries who relied on connections to exploit information asymmetries were a temporary phenomenon of the industry’s early stages. Their exit marks the transition from a phase of quick profits to one where success depends on hard work and technical expertise.